Mastering Risk Management

INTRODUCTION

Events and losses are a fundamental part of risk management. They are a clear and explicit signal that a risk has occurred. This may be due to the failure of a control, the lack of a control or simply a very unusual event that was not foreseen.

As shown in Figure 8.1, events are one of the three fundamental processes of risk management. They provide a valuable objective challenge to the subjective nature of risk and control self-assessments. They are also often used as indicators of risks and controls, as we saw in Chapter 7, Risk management and indicators.